AimIAS : Daily Current Affairs July 1st

At stroke of midnight, India gets a ‘good and simple tax’

Calling the GST a simpler, modern and more transparent taxation system that will do away with 500 different taxes levied across the country’s 29 States and seven Union Territories, Govt. said that it would end the spectre of tax terrorism and Inspector Raj that India’s businesses have had to endure for long.
The GST Council chaired by Finance Minister Arun Jaitley slashed the tax rate on fertilizers from 12% to 5% and tractor parts from 28% to 18%, in a bid to make the new tax regime more farmer-friendly
Several key aspects such as the e-waybill system, the tax collected at source (TCS) by e-commerce companies, and the dates of filing returns have been delayed.
The Government on June 18 decided to push back the date of filing returns for July and August under GST. While the deadline for filing returns for July was earlier August 10, it was deferred to September 5. The deadline for August was moved to September 20 from September 10
“The decision to delay the date of filing returns suggests that the government itself has realised that the GST Network is itself not ready and that the GST Suvidha Providers also need more time “
The e-waybill system, envisaged to provide an electronic way bill for the movement of goods across the country, met with huge opposition from industry players since the rules were considered to be too complicated to implement.

The Madhya Pradesh High Court on Friday issued a notice to the Election Commission on a plea filed by Public Relations, Legislative Affairs and Water Resources Minister Narrotam Mishra for disqualifying him from the Assembly allegedly for corruption and paid news during the 2008 Assembly polls.
The EC on June 24 disqualified Mr Mishra under Section 10A of the Representation of the People Act, 1951

Amid a face-off between Indian and Chinese troops along the India-China border, the Kailash-Mansarovar Yatra through the Nathu La pass in Sikkim has been cancelled
However, pilgrims travelling through the Lipulekh pass in Uttarakhand will continue as scheduled, a government official said.
The annual Kailash Mansarovar Yatra was flagged off earlier this month by External Affairs Minister Sushma Swaraj.
However, China had declined permission for the first group of 50 pilgrims to proceed to Mount Kailash through the Nathu La pass

The GST is a destination based tax, and as such is viewed as being to the advantage of the consuming States and to the detriment of the producing States like Maharashtra, Tamil Nadu, Gujarat, Haryana, and Karnataka
These States had raised objections to the implementation of GST, forcing the Centre to agree to a formula for compensating them in the event of a loss of revenue.
The 14th Finance Commission advised the Centre to provide 100% compensation to States for their revenue loss after implementation of GST for the first three years. The fourth year would bring 75% compensation, and the fifth year 50% compensation.

The GST, once implemented, will subsume almost all the cesses levied at the moment, including Swachh Bharat Cess and Krishi Kalyan Cess.
Other cesses like the education cess on imported goods and the cess on crude oil will remain under GST.
However, the government needs extra revenue to compensate the States, and so the GST Council decided to impose additional cesses for five years on certain goods over and above the highest tax bracket of 28%.
These goods on which cess will be levied include tobacco products,coal, motor vehicles, which include all types of cars, personal aircraft, and yachts
These additional cesses, however, will be removed after five years

Finance Minister Arun Jaitley said the rollout of the Goods and Services Tax(GST) will ease inflation,make tax avoidance difficultand boost GDP growth
He said the implementation of the landmark unified tax should beseen as the beginning of a new journey that will expand the country’s economic horizon.
He further said 17 transaction taxes in States and the Centre and 23 cesses would be subsumed in the GST. An assessee will have to file only one return.
“Inflation will come down, tax avoidance will be difficult, India’s GDP will be benefited and extra resources will be used for welfare of poor and weaker section,”

The benefit of the GST system is that essentially it subsumes all taxes into one. This means that whatever activity you are in, there is only one indirect tax that is applicable. You do not have to worry about the different forms of taxes that are applicable for your activity. That instils a degree of certainty in the system and it also eases the complexity of getting yourself registered
The second advantage is that it has done away with levies on inter-State transactions — which means you are really opening up the market.
The third is that GST will hopefully remove the cascading of taxes which was endemic in the previous system

Drawbacks

The first is that it is extremely complex because of the number of tax rates being levied and, second, because each State is being treated as a separate tax jurisdiction.
Because of this, it introduces additional complexity in the GST system which, in a different form of GST, would not have been there.
So although you are not going to be worrying about 21 different taxes, you might have to worry about the complexity of a single tax rate across the country, which can get quite demanding.
The issue there is the complexity of the tax system really depends on the range of goods and services a particular enterprise is transacting in. If you haverelatively few goods and services you are transacting in either as a buyer or a seller, then it works quite well.
But if you are transacting in a large number of goods and services, then the system can get quite complex.